FX.co ★ Strategy of the day on GOLD

Gold approaches the upper limit of its medium-term bearish channel at 1,585 suggesting a decline. However, a break of this level will initiate a violent bullish channel.
Technical indicators do not provide clear signals and until the resistance is not broken the assumption of a decline is most likely. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
Gold is currently testing the upper limit of its channel, we suggest 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 1,585 with the 1st objective at 1,575 and then at 1,573. A breakthrough of 1,588 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means to buy gold as soon as it is broken through its resistance of 1,585 with the 1st objective at 1,595 and then at 1,598. A breakthrough of 1,582 will invalidate this scenario.